We are pleased to announce the first article of the new academic year in our series of Shorenstein APARC Dispatches. This month's piece comes from Dr. John D. Ciorciari, one of this year's Shorenstein Fellows. Dr. Ciorciari's current research centers on the alignment policies of small states and middle powers in the Asia-Pacific region. He also has interests in international human rights law and international finance. In this piece, Dr. Ciorciari shares some comments on "Myanmar After the Saffron Revolution."

In late September, tens of thousands of Buddhist monks took to the streets of Myanmar, leading the largest uprising against the ruling State Peace and Development Council (SPDC) since 1988. A sharp and sudden hike in fuel prices sparked the protests, but to the regime's many critics, the revolt displayed the depth of popular discontent with economic mismanagement, corruption, and political repression in Myanmar. Images of unarmed monks confronting the feared tatmadaw (armed forces) won the protesters considerable moral support from abroad, as did a public appearance by Aung San Suu Kyi. Some observers anticipated that the "saffron revolution" would lead to the overthrow of the regime, as occurred during the "rose," "orange," and "tulip" revolutions in Georgia, Ukraine, and Kyrgyzstan.

The tatmadaw responded swiftly and brutally, however. Troops imposed tight curfews, raided pagodas, and used clubs and tear gas to disperse protesters. In a matter of days, the armed forces killed numerous demonstrators, arrested or detained thousands more, and re-imposed control. The saffron revolution thus appears to have subsided, and the outlook is not promising for advocates of regime change or dramatic policy shifts in Myanmar.

The episode did reveal some minor cracks in the SPDC edifice. Colonel Hla Win, a longtime senior member of the junta, reportedly defected into an ethnic Karen rebel-controlled area and is seeking political asylum after defying an order to massacre a group of monks. At least one senior army official has leaked incriminating evidence to the press, and a foreign ministry official resigned at the government's "appalling" response to the protests. Prime Minister Soe Win has been hospitalized with leukemia for months. Rumors even swirled of a coup. Nevertheless, SPDC chairman Than Shwe, his deputy Maung Aye, and other cabinet members appear to have closed ranks, and the SPDC looks quite firmly entrenched.

International responses to the uprising and military response have been mixed. Western governments and activist groups quickly condemned the SPDC and pushed the regime to open dialogue with Aung San Suu Kyi's opposition National League for Democracy. U.S. President George W. Bush announced tighter sanctions shortly after the crackdown began. Japan--which has favored engagement in the past--is now considering sanctions and has demanded an explanation and an apology for the shooting of a Japanese journalist.

To dampen international pressure, the SPDC allowed Nigerian diplomat Ibrahim Gambari to enter the country as a UN special envoy. Gambari has met with both Than Shwe and Aung San Suu Kyi to convey the UN's concerns about the crackdown. The SPDC has also appointed retired general U Aung Kyi as an official interlocutor with Aung San Suu Kyi and has made gestures of conciliation to the clergy. However, the Myanmar leadership has rebuffed demands for more serious political dialogue or far-reaching policy reforms.

A degree of Chinese and Russian protection has helped shield the SPDC from international pressure. China and Russia vetoed a U.S.-sponsored UN Security Council resolution demanding that the SPDC free all political prisoners. Officials in Beijing and Moscow argued that the unrest was an "internal matter" unsuited for Security Council action. Their defense of a strong norm of sovereignty--rooted largely in their fear of similar Western attacks--provides political cover for the SPDC. Their objection to isolating Myanmar economically also makes it unlikely that a program of enhanced U.S. and European sanctions will bring the junta to its knees. As long as Myanmar's neighbors do business with the SPDC, it will probably survive.

To date, divergent foreign policy priorities have conspired against a genuinely multilateral policy to drive reform in Myanmar. For China, Myanmar is a strategic gateway to the East Indian Ocean and a source of prized raw materials, as well as a political ally on issues of state sovereignty. India and Thailand have also been loath to cut off or alienate their troublesome neighbor. India has little ideological affection for the SPDC but rejects sanctions and has responded quietly to recent events in Myanmar. Indian officials view Myanmar as an important regional pivot with China and a source of natural resources. Thai policymakers, worried about refugees and instability in ethnic minority enclaves along the border, have tended to prioritize stability over reform in relations with the SPDC. Both India and Thailand derive considerable economic benefits--both legal and illicit--from an open border. In addition, they fear that using their limited leverage to attack the junta will drive it further into China's embrace.

The governments of other member states of the Association of Southeast Asian Nations (ASEAN) have split on the issue. Indochinese states defend Myanmar's sovereignty, while the Philippines, Singapore, Malaysia, and Indonesia have been more openly critical. With a bit of diplomatic legerdemain, Singapore expressed ASEAN's grave concern to Myanmar, speaking as the Association's chair. Discourse in regional think tanks suggests that a growing number of Southeast Asian officials advocate Myanmar's suspension from ASEAN. Although suspension would push Myanmar even further into the margins of international society, it would be unlikely to unseat the SPDC. Isolation also bears obvious risks; cloning North Korea is not in any ASEAN government's interest.

Most analysts agree that China holds the key to improving the prospects for reform, development, and democracy in Myanmar. Indeed, a change in Chinese policy would increase the likelihood of tougher Indian and ASEAN stances, since a fear of encouraging close Sino-Myanmar ties helps justify their existing approaches. The possibility of embarrassment at the upcoming Olympic games provides a short-term incentive for China to press the SPDC for better governance. A longer-term incentive will be to secure the countries' shared border, which is plagued by narco-trafficking, illegal migration, and ethnic conflict. Finally, China has an incentive to build its credibility as a constructive force in Southeast Asia and beyond. Chinese officials have led a well-documented "charm offensive" in the region, both bilaterally and through multilateral institutions, to build influence. To the extent that ASEAN governments make reform in Myanmar a priority, China can show itself to be a responsible stakeholder in Southeast Asia's future.

In the near term, a coalescence of the policies of regional powers is unlikely. Moreover, strong regional pressure does not guarantee seismic policy shifts in Myanmar. The SPDC's harsh response to the protests--like its 2006 decision to move the national capital to a remote area--testifies to considerable paranoia. Still, the outside world has economic, security, and moral reasons to hold Myanmar to higher standards of governance. The pace and direction of change will depend only marginally on the severity of Western sanctions, which bite but do not cripple the regime. Western governments' ability to identify common objectives and forge cooperation with Asian partners will be more determinative. Ultimately, the development of concerted action by relevant Asian states is likely to be the rate-limiting step in the equation. The saffron revolution suggests that many domestic actors are prepared to assume risks to promote reform if Myanmar's neighbors take a tougher stand and help provide the enabling conditions for change.

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Shorenstein APARC Dispatches are regular bulletins designed exclusively for our friends and supporters. Written by center faculty and scholars, Shorenstein APARC Dispatches deliver timely, succinct analysis on current events and trends in Asia, often discussing their potential implications for business.

On June 2, 2007 at Stanford University, the Southeast Asia Service Leadership Network (SEALNet) hosted a well-attended dinner to celebrate its third year of activity and its plans for social service projects in five Southeast Asian countries in Summer 2007.

SEALNet faculty adviser Donald K. Emmerson kicked off the event by congratulating the students on their accomplishments, talents, and enthusiasm. Leadership coach and author Leng Lim, whose Southeast Asia Leadership Initiative fostered the creation of SEALNet in 2004, gave an inspirational talk to the students who would soon leave for Southeast Asia to implement the network's projects. Other speakers included SEALNet Co-Director and Stanford graduating senior Viet Huynh (Stanford 2007) who was thanked for his commitment and service to the organization since its founding.

SEALNet's agenda for 2007 represents a dramatic expansion from the network's first project in Summer 2005. In that year the students delivered a dozen computers to a youth organization in Ho Chi Minh City, Vietnam, and helped local youths learn how to use them. In Summer 2007 the following projects are planned:

Project Cambodia (Phnom Penh, 19 June - 1 July) empowers young Cambodian performing artists and selected high school students to spread awareness of Khmer traditional performing arts among Cambodian youths.

Project Indonesia (Sekayu, South Sumatra, 26 August - 8 September) promotes earthquake and sanitation awareness among members of a vulnerable rural community.

Project Philippines (Cebu, 18 - 29 June) disseminates attractive media messages to raise local and national awareness of the risk of gastrointestinal illness from worms.

Project Thailand (Krabi, 27 August - 7 September) tackles environmental problems and raises ecological awareness among inhabitants of a tsunami-affected area.

Project Vietnam (Ho Chi Minh City, 19 - 30 June) develops a sustainable vocational English program for street children that can help them get jobs in tourism and other service industries.

SEALNet's goals include:

• Creating a cross-cultural network linking students and professionals interested in social and development issues in Southeast Asia;
• Empowering students for positive social change through service leadership projects and by inspiring other students to become leaders in their own communities.
• Working through community service leadership to help make Southeast Asia more united internally and more engaged internationally.

WASHINGTON, May 24 (IPS) - This year the Association of Southeast Asian Nations celebrates its 40th birthday, and it has big plans. After four decades of being largely a political and security alliance, ASEAN is accelerating its plans for economic integration.

ASEAN leaders are so eager to pull together into an economic community that they recently decided to move the goalposts. The economic benchmarks originally planned for 2020 have been moved up to 2015.

"The mission of this economic community is to develop a single market that is competitive, equitably developed, and well integrated in the global economy," says Worapot Manupipatpong, principal economist and director of the office of the Secretary-General in the ASEAN Secretariat. He was speaking last week at an Asian Voices seminar in Washington, DC, sponsored by the Sasakawa Peace Foundation.

The single market of 2015 would encompass all ten members of ASEAN: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), Philippines, Singapore, Thailand, and Vietnam. According to the projections of the ASEAN Secretariat, the single market will be accomplished by removing all barriers to the free flow of goods, services, capital, and skilled labor. Rules and regulations will be simplified and harmonised. Member countries will benefit from improved economies of scale. Common investment projects, such as a highway network and the Singapore--Kunming rail link, will facilitate greater trade.

Although there will not be a single currency like the European Union's euro, the ASEAN countries will nevertheless aim for greater currency cooperation.

"ASEAN's process of economic integration was market-driven," says Soedradjad Djiwandono former governor of Bank Indonesia, and it was influenced by the "Washington consensus" favoring increased liberalisation. "It is a very different framework from the closed regionalism of the Latin American model," he continues. With multilateral talks on trade liberalisation stalled, efforts have largely shifted to bilateral negotiations. "There has been a proliferation of bilateral agreements that developed countries use as a way to push a program for liberalising different sectors," Djiwandono concludes.

So far, ASEAN points to increased trade within the ten-member community as an early sign of success. But, overall trade share -- 25 percent -- pales in comparison to the 46 percent share of the North American Free Trade Agreement countries or the 68 percent share of EU countries. And with intra-ASEAN foreign direct investment rather low -- only 6 percent in 2005 -- financial integration lags behind trade integration.

The ASEAN approach differs in several key respects from the EU model, which originated in a 1951 coal and steel agreement among six European nations. ASEAN's origins, in contrast, have been primarily political and security-oriented, observes Donald Emmerson, director of the South-east Asia Forum at the Shorenstein Asia-Pacific Research Center at Stanford. "The success attributed to ASEAN is that it presided over an inter-state peace ever since it was formed. There's never been a war fought between ASEAN members."

Also distinguishing ASEAN from EU is the latter's institutionalisation. "ASEAN is radically different," Emmerson continues. "The much discussed ASEAN way is consultation, not even voting, since if they vote, someone will lose. Sometimes the consultation goes on without result. Sometimes decisions are reduced to the lowest common denominator. It also means that rhetoric predominates." This consultative process will be tested in November, when ASEAN leaders gather to adopt a charter, something that the EU has so far failed to accomplish.

Another difference with Europe is the enormous economic disparities among the ASEAN members, with Singapore and Brunei among the richest countries in the world and Laos among the poorest. These economic disparities are reproduced within the countries as well.

Worapot Manupipatpong points to two ASEAN initiatives for closing the gap. There is help for small and medium-sized enterprises. And the Initiative for ASEAN Integration,"basically provides technical assistance to Cambodia, Laos, and Myanmar so that they can catch up with the rest of the ASEAN members," he says. "Attention will be paid to where these countries can participate in the regional networks, what comparative advantage they have, and how to enhance their capacities to participate in the regional development and supply chain."

Then there are ASEAN's efforts to address "public bads," according to Soedradjad Djiwandono. "When there is a tsunami or a pandemic," he argues, "the worst victims are the marginalised or the poor. Addressing that kind of issue has some positive impact on reducing inequality."

"The gap between the early joiners and the later joiners will continue to be substantial because ASEAN has always been more of a forum and less of a problem-solving organisation," observes Karl Jackson, director of the Asian Studies Program at the School for Advanced International Studies at Johns Hopkins University. "As a result one would expect that these gaps would be closed only as individual countries increase their rates of growth." He attributes the inequality within countries to the middle stage of growth experienced by almost all societies: "Inequality increases before the state becomes strong enough to redivide some of the pie and take care of the gross inequalities caused by rapid economic growth."

ASEAN is banking on financial and trade liberalisation increasing the overall regional pie. On paper it is an ambitious project. But "the low hanging fruit have been plucked," says Donald Emmerson. Tariffs on the "easy commodities" have already been reduced to less than 5 percent. But non-tariff barriers to trade remain, and member countries are very protective of certain sectors.

Also tempering the region's optimism is the memory of the Asian financial crisis. The crisis began in Thailand in 1997 and spread rapidly to other countries in the region. One school of thinking holds that capital mobility -- "hot money" -- either caused or considerably aggravated the crisis. Since the ASEAN integration promises greater capital mobility, will the region be at greater risk of another such crisis?

"One consequence of the economic dynamism of the Asia-Pacific region," notes Donald Emmerson, "is that the accumulation of vast foreign exchange reserves -- obviously in China, but in other countries too -- more than anything else represents an asset that can be brought into the equation as a stabilising factor in the event of a financial crisis." Also, he continues, as a result of the ASEAN plus Three network, which adds China, South Korea, and Japan to the mix, the 13 countries have "made serious headway toward establishing currency swap arrangements that would come into play in an emergency on the scale of an Asian financial crisis."

Karl Jackson also looks to currency reforms as a hedge against future crisis. The Thai baht and the Indonesian rupiah are now unpegged currencies. "You will not have a situation in which the central bank of Thailand loses 34 billion US dollars defending the baht," Jackson argues. "Instead, the baht will appreciate or depreciate according to market forces."

But Jackson still remains cautious about the future. He points to the large number of non-performing loans in the Chinese banking sector. Also, there is "this anomaly of the U.S. absorbing two-thirds of the savings coming out of Asia, plugging it mostly into consumption rather than direct investment," he observes. "Eventually there has to be some kind of readjustment. The real value of the dollar must fall." (END/2007)

Reprinted by permission from IPS Asia-Pacific.

The 14th Informal APEC Economic Leaders' Meeting concluded on Nov. 19, 2006, and the participants had their photo taken in colorful Vietnamese traditional costumes called ao dai. Still in the shadow of the congressional election failure, President George W. Bush, realizing that a stable Asia is very important for the U.S. geostrategy, took advantage of the occasion to enhance the prestige of the United States. Just as American experts said, the Bush administration has probably become a lame duck now, but even a healthy duck needs to find a quiet pond.

"APEC's uniquely trans-Pacific character is an important political reason for U.S. to strengthen the group," Donald Emmerson, director of the Southeast Asia Forum of Shorenstein APARC at Stanford University, explained. "While APEC has lagged, East Asian regionalism has boomed. That has been good for East Asia. But U.S. and East Asian interests alike could be hurt if the Pacific Ocean ends up being split between rival Chinese and American spheres of influence."

However, the U.S. effort to save the Doha Round of trade talks with the Asia-Pacific Free Trade Agreement has yielded little. The Doha Round aimed to remove trade barriers in the world but was suspended due to some countries' agriculture protection policies. Washington had wanted to model the Doha Round upon the Asia-Pacific Free Trade Agreement. But U.S. officials never expected that there would be so many differences among the Asia-Pacific leaders, and that the economic development of Pacific Rim countries differ in thousands of ways. Despite the fact that the Hanoi Statement reiterated that supporting the Doha Round was APEC's priority, no material progress has been made.

"The U.S. is urging a last ditch effort to restart the talks through APEC," Professor Charles Morrison, president of the East-West Center located in Hawaii, says. "Whether or not APEC can do more than make a rhetorical statement of support is unsure. I feel that the APEC economies should agree to prepare new offers within a short period of time -- three weeks, for example -- to challenge the Europeans, Brazilians, Indians and others."

United States Steps Out to "Please" ASEAN

Seventeen years after its establishment, APEC now plays a decisive role in the international political arena. It has 40 percent of the world's population, 48 percent of the world trade volume and 56 percent of the world GDP. Since 1989, the economy in this region has grown by 26 percent, compared to only 8 percent economic growth rate in the rest of the world. With the double advantage of economic strength and rapid growth, China, being one of APEC's main economies and its "engine," has fully taken the limelight. On the other hand, the United States has been weighed down with countering terrorism in the Middle East.

"China has done very well in enhancing its relations with Southeast Asia in recent years," Sheldon Simon, professor of the Program in Southeast Asian Studies at Arizona State University, points out. "China has not only established a free trade forum for China and ASEAN countries, but also helped and influenced the area with its economy and culture. But I think that the United States has realized the importance of this area and come back to fasten its friendly relationship with the region."

The United States coming back to Southeast Asia and repairing its relations with the ASEAN countries is partly activated by China's increasing influence in the area.

"The naissance and growth of some democratic countries in Southeast Asia has received sympathetic response of democratic values from Washington," said Simon. "With the traditional friendly relations between the area and the United States, these countries value their friendship with the United States sometimes more than the trust in their neighboring countries. Geopolitics is also very important factor. The Asia-Pacific area is a very important to the world economy and the U.S. power structure. Therefore, the United States will not easily give it up."

Another motive for the United States to foster closer relations in the area is the common interest of countering terrorism. There are still some terrorist groups in Indonesia, the Philippines and southern Thailand.

"President Bush has a perfect attendance record at APEC meetings (Clinton missed two of them), which says that he does take APEC seriously and believes Asia is important to U.S. interests," Ralph Cossa, president of the Pacific Forum Center for Strategic and International Studies, said in an interview with the Washington Observer Weekly.

Besides attending the APEC summit meetings annually, Washington has recently activated several plans to "please" the ASEAN countries, including setting up a ministerial dialogue system with them and a platform for maintaining contact at the deputy finance minister level, even increased exchanges at the deputy defense secretary level.

The extent of U.S. efforts to foster cordial relations with Southeast Asian countries can also be seen in the increasingly friendly U.S.-Vietnamese economic and trade relations. The Bush administration is not only supporting Vietnam to enter the WTO, but has even proposed giving Vietnam Permanent Normal Trade Relations (PNTR) status.

"The reason that Bush failed to bring the gift of PNTR status to the APEC Hanoi summit is that the Congress dominated by the Republicans was lacking efficiency and could not pass the proposal in time," Simon explained. "But I think that it will be passed as soon as possible in the next month or by the Democrats who begin to dominate the Congress from next January."

Simon and Cossa both admit that Burma is an unharmonious element in U.S. relations with ASEAN. The Burmese dictatorial military government is really the most typical negative example of democracy for the United States. But ASEAN countries are reluctant to see Burma "punished" by the United States for ideological reasons. So Burma has become a sensitive issue in U.S.-ASEAN relations.

"This is a good way for him to interact with ASEAN since Myanmar is not there and this issue does not have to be addressed," said Cossa.

Simon, an expert of Southeast Asia affairs, points out ASEAN countries should be happy about the advantage they have with China and the United States vying for their attention. Being able to juggle the two big powers, Southeast Asia has gained many practical interests and financial aid for its economy, trade, security, culture and education.

"In a short period, there will not be any serious interest conflicts in the triangle balance of China, the United States and ASEAN," Simon told the Washington Observer Weekly. "ASEAN countries' only worry, if there is any, is an accidental spark in the U.S.-China military interaction in Southeast Asia such as the confrontation across the Taiwan Straits."

Turning the Asia-Pacific into a "Gigantic Enterprise?"

"The United States wants to demonstrate its continuing interest in the Asia-Pacific region. It is urging for a study of an Asia Pacific free trade area and support for an APEC business card, and both shifts of approach, illustrate its interest in and support for the APEC process," said Morrison.

An important subject for the APEC Hanoi summit is the "active discussion" of establishing an APEC free trade region. Former U.S. President Bill Clinton proposed for the first time in 1993 the setting up of such an economic zone. Before Bush's visit, Deputy U.S. Trade Representative Karan Bhatia suggested that establishing an APEC free trade zone would be a subject worth serious discussion. But his proposal did not receive a warm response from the host. The Vietnamese Deputy Foreign Minister Le Cong Phung stressed that establishing a free trade zone is a long-term objective and will not affect progress of negotiations with the WTO or other bilateral trade agreements.

"Regarding the study of the Asia Pacific free trade area, a number of economies were skeptical because it would be such a large undertaking," said Morrison. A similar plan was once axed in an APEC ministerial statement and the leaders attending this summit do not seem to have much interest in it.

Simon explained Bush's thinking on the subject: "Washington reiterated its intention to establish an Asia-Pacific free trade zone in order to save the precarious WTO Doha Round. Breaking the tariff barriers in the Asia-Pacific region will help continue to press relevant countries to concede in granting agricultural tax subsidies and hopefully open the door to the Doha Round."

The five-year Doha Round was suspended in July this year because six major WTO members -- the United States, the European Union, Japan, Australia, Brazil and India -- failed to reach agreement on market access for agricultural and non-agricultural products. Given the situation, the organizer said that the informal APEC economic leaders' meeting would provide a "good opportunity" to help restore the Doha Round talks. However, the Hanoi summit joint declaration just vaguely indicated that APEC will pursue further integration on issues such as energy in 2007. It would be extremely optimistic to expect that APEC will be able to remove all the tariff barriers in the region before 2010. Although the area produces 50 percent of the world's economic value, the styles and stages of economic development, the cultural backgrounds and political systems of the countries in the region vary a great deal, making it very difficult for these Asian countries to eliminate all these discrepancies and become fully integrated.

"Out of different worries, many Southeast Asian countries are actually not interested in the proposal though they do not speak out. Or we may say that it's not time yet now to change the Asia-Pacific region into a gigantic enterprise," Simon told Washington Observer Weekly.

Quite apart from who concedes what in return for what concession over the APEC free trade mechanism, the question arises: What geographical scope should a regional trade arrangement have? Who should be a party to the agreement and who should not?

There would appear to be three different ideas on the table: (a) the APEC-wide free trade area that the United States proposed at the recent summit in Hanoi; (b) the East Asia Summit-wide framework that Japan reportedly favors, which would include ASEAN + 6 (China, Japan, South Korea, India, New Zealand, Australia) but not the United States; and (c) the ASEAN Plus Three (China, Japan, South Korea) context that China seems to prefer, in which the exact positions of Tokyo and Beijing are not entirely clear.

"Without discussing the merits or demerits of each of these arrangements, suffice it to note that since ASEAN is common to all of them, the net effect of these alternative ideas is to strengthen the negotiating position of ASEAN," said Emmerson. "Then again, ASEAN will not necessarily be unified as to its preference for the three proposals. It will be interesting to look for the positions to be taken by individual ASEAN countries and for their collective effort to arrive at a single negotiating position, e.g., in the run-up to the ASEAN summit and the second the East Asia Summit in the Philippines next month."

Cossa has hope for 2007. "The U.S. in particular would like to see APEC moving faster, and will look ahead to next year, with Australia in the chair, for some real progress."

American Public Doesn't Share Washington's Interest in Southeast Asia

The prospect of economic and strategic cooperation brought about by APEC made for a lively week in Southeast Asia. But it stirred little response in the United States. According to the interviewed experts of Southeast affairs, the American public is still haunted by the situation in Iraq and the mid-term election. Even the U.S. media framed the event as Bush's first visit to a foreign country since the Republicans were defeated in the mid-term election.

"Because of the Congressional election, President Bush will want to show leadership rather than simply respond to the new Congress. Both Doha and the nuclear proliferation issue are examples," said Morrison.

Cossa holds a different view: "I don't think the elections will have any major impact on what Bush does or how he does it during this trip. Iraq is his legacy. What he does in Asia can make things better or worse at the margins but will likely be overshadowed by Iraq."

Simon echoed the sentiment. "On one hand, the Republican Party's defeat in the election cannot directly influence Bush's trip to Asia. On the other hand, Bush's economic achievements in the Southeast region will not add to his political record. In Asia, only the North Korea issue may sway the public opinion in the United States."

Yan Li, Washington Observer weekly - Issue No. 201, November 22, 2006

Reprinted by Permission February 12, 2007.